ENG-2003 — Page 142

CHAPTER 5

Commerce and Industry

Strong economic ties with the Mainland, especially with the Pearl River Delta (PRD), now form one of Hong Kong's fundamental strengths. The branching out of production processes to the Mainland in the last two decades has triggered a remarkable transformation in the economy of both Hong Kong and the PRD and brought about the development of Hong Kong into an international financial centre and services hub. The Mainland is Hong Kong's largest trading partner, accounting for 43 per cent of its total trade in 2003. Hong Kong accounted for nearly half of the Mainland's foreign direct investment as at the end of June 2003. Of the 3 200 regional headquarters and offices established in Hong Kong in mid-year, more than 80 per cent are responsible for overseeing their Mainland businesses.

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HONG KONG is a leading international trading and services hub as well as a high value-added manufacturing base. It is widely recognised as one of the freest economies in the world, and the gateway to the Mainland market.

In 2003, Hong Kong's total merchandise trade amounted to $3,548.2 billion. Over 288 000 business establishments in a wide range of services and manufacturing sectors are operating in Hong Kong, and the vast majority are small and medium enterprises (SMEs). There is also a strong presence of international businesses in Hong Kong. At the end of 2002, Hong Kong had about 9 000 enterprise groups with inward direct investment.

Hong Kong's continuing economic success owes much to a simple tax structure and low tax rates, a versatile and industrious workforce, an excellent infrastructure, free flow of capital and information, the rule of law, and the Government's firm commitment to free trade and free enterprise.

The Government sees its task as facilitating commerce and industry within the framework of a free market. It maintains no tariffs and no regulatory measures impinging on international trade other than those required to discharge its international obligations or to protect health, the environment and access to high technology. The HKSAR also practises an open and liberal investment policy and actively encourages inward investment.

The Government's industrial policy aims to promote industrial development by creating a business-friendly environment and providing adequate support services.